In the 2015 autumn statement the then Chancellor announced proposals for whiplash claims and an increase to the small claims limit in personal injury actions. The Government has now published its Consultation response.

The consultation proposal was far reaching: (i) setting fixed compensation (£400/425 for psychological elements) for pain and suffering (PSLA) of particular duration, or removing compensation entirely; (ii) setting a set tariff for compensation; and (iii) raising the small claims limit for personal injury to £5,000.

The Government received 625 responses, and now proposes:

a tariff of fixed compensation for whiplash injuries with duration of between 0 and 24 months;

judicial discretion to increase the award by up to 20% in exceptional circumstances;

requiring medical evidence before a party offers, pays or requests an offer to settle a claim;

increasing the small claims limit for road accident personal injury claims to £5,000; and

Increasing the small claims limit for all other types of personal injury claim to £2,000.

Proposals (1) to (3) are in the Prisons and Courts Bill (now before Parliament). Items (4) and (5) will be introduced through secondary legislation.

The Rule of Law

The reforms offend the principle of equality before the law. Whiplash generally results from the particular position and physique of the victim at the time of the accident: if you have a more vulnerable neck you are more likely to suffer injury. The creation of a special legal process for these claims discriminates against those at risk of suffering such an injury.

Can this discriminatory effect be justified by a legitimate aim? The stated aim is to defeat fraud, but there is no logical connection between the risk of whiplash injury and fraud. Courts already have several sanctions for censuring and deterring exaggerated or fraudulent claims, including loss of costs protection when there is evidence of fundamental dishonesty; control of experts’ fees under the MedCo Portal; and measures under the Criminal Justice and Courts Act 2015. These are being increasingly used by judges to ‘crack down’ on fraud. The Bar Council has pointed out that recent reforms “reduce the cost of litigation and assist in combating fraudulent and exaggerated claims”[1].

A Traffic Injury Tariff

Fixed-sum compensation is wrong in principle. Judges have developed pain and suffering awards over the years, assisted by the JC Guidelines for the Assessment of General Damages. Such a sophisticated assessment benefits all parties. The high number of cases which settle out of court shows the current system works. Fixed sum awards are arbitrary and do not take account of the range of factors that would otherwise impact on the assessment of PSLA. Disputes will cease to be about the injury’s extent and nature but about whether or not an injury fits within a contrived definition. Tariffs will not prevent disputes but simply change the basis upon which the parties argue about the level of compensation. The residual discretionary power will lead to disputes over its exercise and increase litigation.

2015 average payment for PSLA – uplifted to take account of JCG uplift (industry data)

Judicial College Guideline (JCG) amounts (13th edition) Published September 2015

New tariff amounts

0–3 months

£1,750

A few hundred pounds to £2,050

£225

4–6 months

£2,150

£2,050 to £3,630

£450

7–9 months

£2,600

£2,050 to £3,630

£765

10–12 months

£3,100

£2,050 to £3,630

£1,190

13–15 months

£3,500

£3,630 to £6,600

£1,820

16–18 months

£3,950

£3,630 to £6,600

£2,660

19–24 months

£4,500

£3,630 to £6,600

£3,725

These proposals deprive individuals of the full compensation to which they are entitled. They also create a significant divide between tariff claims and other PI claims which will continue to be subject to full judicial consideration. Such a ‘dualist’ system will undermine public confidence in the proposed scheme.

Small Claims Track Increase

If a tariff is introduced to deal with whiplash claims the argument for increasing the small claims limit in other types of PI claim falls away. However, even without a new tariff, increasing the current limit will have significant consequences for access to justice. Raising the limit will significantly increase the number of unrepresented litigants, who will struggle to cope with court procedures, including obtaining medical records and instructing experts.

Tripping and slipping over a crack in the pavement is a good example of the complex issues involved, including knowledge of legislation, the laws of negligence and nuisance, and the scope of a local authority’s duty of care. Road traffic cases present difficult issues of causation, assessment of damages, and contributory negligence. While some may be able to deal with these, many will struggle. Meanwhile, insurers can instruct experienced lawyers: the parties will not be on an equal footing. This places increased pressure on the court service who will face the increased administrative burden of dealing with more litigants in person.

No Compelling Case

There is no compelling case for these reforms. ‘Whiplash’ claims can be dealt with through the current system. The Government should allow more time for existing judicial tools to develop in tackling fraud. There is no evidence that claims for damages for ‘whiplash’ are too high or that a tariff scheme will reduce the number of fraudulent claims.

A reduction in motor insurance premiums is a questionable aim. There is no obvious mechanism by which any ‘saving’ will be passed on to policyholders. An individual’s right to bring a claim for injury to court is central to the principle of equality that underlies the rule of law; the government’s reform will restrict that right for an unenforceable and chimerical benefit to motor insurance policyholders.